PennyMac Mortgage Investment Trust (NYSE:PMT) reported a solid performance in the third quarter of 2023, with a net income of $31 million, or $0.36 per diluted share. The company's Chairman and CEO, David Spector, stated an annualized return on common equity of 9% and a book value per share of $15.85. PMT's strategic refinancing of term notes and investments in mortgage servicing rights (MSRs) positions the company for continued growth despite a slight decrease in the fair value of its MSR portfolio.
Key Takeaways
- PMT reported a Q3 net income of $31 million, with $0.36 earnings per diluted share and a 9% annualized return on common equity.
- The company expects total mortgage originations to reach $2.3 trillion by 2025, supported by declining mortgage rates.
- PMT refinanced $457 million in term notes, replacing them with $514 million in new notes at lower costs and longer durations.
- Investment in MSRs doubled from the previous quarter, with $90 million allocated in Q3.
- The fair value of PMT's MSR portfolio slightly decreased to $3.8 billion, maintaining low delinquency rates.
- PMT projects a $0.37 average earnings run rate per share over the next four quarters, with potential to increase to $0.40 if the yield curve steepens.
Company Outlook
- PMT is poised to repay $210 million in exchangeable senior notes due in November.
- The company is exploring opportunities in private label securitization, with a deal expected to close this quarter and another shortly after the New Year.
- Management aims to achieve returns above 10% on common equity while balancing credit-sensitive and interest rate-sensitive strategies.
Bearish Highlights
- A reduction in retained conventional loan production is anticipated in Q4 to optimize capital allocation.
- The fair value of PMT's MSR portfolio has decreased slightly from $3.9 billion to $3.8 billion.
Bullish Highlights
- Over half of PMT's equity is invested in seasoned MSRs and risk-sharing transactions, expected to perform well due to low delinquency rates and substantial home equity accumulation.
- The company maintains a strong position in correspondent channels and is growing its direct lending presence.
Misses
- There was no specific mention of any misses during the earnings call.
Q&A Highlights
- Management discussed strategies to enhance returns and balance the portfolio between credit-sensitive and interest rate-sensitive assets.
- There is a focus on increasing investments in credit-sensitive strategies, with a cautious approach to retaining more MSRs.
- Current market conditions have led to spread tightening, potentially allowing for further refinancing opportunities.
In summary, PMT's third-quarter earnings call reflected a company successfully navigating market challenges while laying the groundwork for future growth. With strategic investments, refinancing, and a focus on both credit-sensitive and interest rate-sensitive assets, PMT is positioning itself to take advantage of evolving mortgage markets and maintain a stable dividend for shareholders. Management's confidence in the depth of the whole loan market and the potential for increased returns from securitization activities signals a positive outlook for the company's future endeavors.
InvestingPro Insights
PennyMac Mortgage Investment Trust's (PMT) recent performance and strategic positioning are further illuminated by key metrics and insights from InvestingPro. The company's market capitalization stands at $1.19 billion, reflecting its significant presence in the mortgage investment sector.
PMT's financial health is underscored by its attractive valuation metrics. With a P/E ratio of 8.19 and a price-to-book ratio of 0.85, the stock appears to be trading at a discount relative to its book value and earnings. This aligns with the company's reported book value per share of $15.85 and suggests potential upside for investors.
One of the most striking aspects of PMT's profile is its dividend yield, which currently stands at an impressive 11.7%. This high yield is supported by an InvestingPro Tip indicating that PMT "pays a significant dividend to shareholders" and has "maintained dividend payments for 15 consecutive years." This consistent dividend policy aligns with management's focus on providing stable returns to shareholders, as mentioned in the earnings call.
Despite the company's solid dividend history, InvestingPro Tips also highlight some challenges. Analysts anticipate a sales decline in the current year, which is consistent with the company's outlook on reduced retained conventional loan production in Q4. Additionally, net income is expected to drop this year, which investors should weigh against the company's projected earnings run rate of $0.37 per share over the next four quarters.
On a positive note, PMT boasts a perfect Piotroski Score of 9, suggesting strong financial health across various indicators. This score supports management's confidence in the company's strategic positioning and ability to navigate market challenges.
For investors seeking a more comprehensive analysis, InvestingPro offers 9 additional tips for PMT, providing a deeper understanding of the company's financial position and prospects.
In conclusion, while PMT faces some headwinds in terms of revenue and income growth, its strong dividend yield, attractive valuation, and solid financial health indicators suggest that the company remains well-positioned in the mortgage investment market. These insights complement the earnings call information, offering a more rounded view of PMT's current standing and future potential.
Full transcript - PennyMac Mortgage Investment Trust (PMT) Q3 2024:
Operator: Good afternoon, and welcome to PennyMac Mortgage Investment Trust Third Quarter Earnings Call. Additional materials, including the presentation slides that will be referred to in the call, are available on PennyMac Mortgage Investment Trust website at pmt.pennymac.com. Before we begin, let me remind you that this call may contain forward-looking statements that are subject to certain risks identified on slide 2 of the earnings presentation that could cause the company's actual results to differ materially as well as non-GAAP measures that have been reconciled to their GAAP equivalent in the earnings materials. Now, I'd like to introduce David Spector, PennyMac Mortgage Investment Trust Chairman and Chief Executive Officer; and Dan Perotti, PennyMac Mortgage Trust, Chief Financial Officer.
David Spector: Thank you, operator. PMT's third quarter financial results reflect solid levels of income, excluding market-driven value changes, bolstered by fair value changes, including associated tax benefits. Net income to common shareholders was $31 million or diluted earnings per share of $0.36. PMT's annualized return on common equity was 9% and book value per share at September 30 was $15.85 down slightly from the end of the prior quarter. Turning to the origination market, current third-party estimates for total originations averaged $2.3 trillion in 2025, reflecting expectations for mortgage rates to decline from current levels, driving growth in both refinance and purchase volumes. PMT's stale performance in recent periods of heightened volatility highlights the strength of the fundamentals underlying its long-term mortgage assets and our expertise managing mortgage-related investments in a changing environment. We continue to focus on PMT's balance sheet. And this quarter, I'm pleased to note that, we effectively completed the refinancing of $457 million of CRT and MSR term notes, with $514 million of new term notes with lower effective cost and extended durations. Approximately two-thirds of PMT shareholders' equity is currently invested in a seasoned portfolio of MSRs and the unique GSE lender risk share transactions we invested in from 2015 to 2020. As the majority of mortgages underlying these assets were originated during periods of very low interest rates, we continue to believe these investments will perform well over the foreseeable future as low expected prepayments have extended the expected lives of these assets. Additionally, delinquencies remain low due to the overall strength of the consumer as well as a substantial accumulation of home equity in recent years due to continued home price appreciation. MSR investments account for more than half of PMT's deployed equity. The majority of the underlying mortgages of these MSRs remain far out of the money and we expect the MSR asset to continue to produce stable cash flows over an extended period of time. While MSR fair values were down slightly from June 30 due to fair value declines and runoff from prepayments. MSR values continue to benefit from the current interest rate environment as the placement fee income PMT receives on custodial deposits is closely tied to short-term interest rates. Similarly, mortgages underlying PMT's large investment in lender originated risk share have low delinquencies and a low weighted average current loan-to-value ratio of below 50%. These characteristics are expected to support the performance of these assets over the long-term, and we continue to expect that realized losses will be limited. Given the capital raised in the second quarter -- in the third quarter, PMT retained an increased percentage of total conventional correspondent loan production, resulting in approximately $90 million invested in new MSRs, more than double the amount from the prior quarter. In the fourth quarter, we expect PMT will retain a smaller percentage of conventional production as we optimize PMT's capital allocation while also evaluating emerging investment opportunities in the private label securitization market. We believe the mortgage landscape is evolving and increasingly presenting new opportunities for PMT to be a material participant in that market. Volume or pricing limits for the GSEs on certain types of loans, such as non-owner occupied and second homes have driven increased private label securitizations of such loans in recent periods. Additionally, meaningful volumes of jumbo loans are being originated in channels outside of the banks. PMT has long benefited from a synergistic relationship with PFSI and is leading fulfillment and servicing operation to process large volumes of loans at the highest quality standards and positively influence investment performance. Combined, we estimate PMT accounted for approximately 7% of the total production market in the last year with a leadership position in the correspondent channel and a growing presence in direct lending. Through this multi-channel production platform, we have been acquiring and originating growing volumes of loans we think have the potential for PMT to securitize to drive organic investments in newly created private label securities. Given our long-standing relationships with global banks, asset managers and institutional asset-backed investors, we believe PMT is well-positioned to successfully execute on these activities, especially as the origination market returns to more normalized levels. While we've been selling jumbo loans on a whole loan basis, we've been aggregating agency-eligible non-owner occupied loans with the expectations that PMT will close the securitization of such loans in the fourth quarter, followed by another similar transaction in the first quarter next year. Now I'll turn it over to Dan, who will review the drivers of PMT's third quarter financial performance and PMT's run rate potential.
Dan Perotti: Thank you, David. PMT earned $31 million in net income to common shareholders in the third quarter or $0.36 per diluted common share. PMT's credit sensitive strategies contributed $26 million in pre-tax income. Of this, $17 million were from organically created CRT investments, $6 million were from non-agency subordinate MBS and $3 million were from other opportunistic investments in GSE CRT. As David mentioned, the outlook for our current investments in organically created CRT remains favorable with a low underlying current weighted average loan-to-value ratio below 50% and a 60-day delinquency rate of 1.23%, both as of September 30th. The interest rate sensitive strategies contributed pre-tax income of $500,000. The fair value of PMT's MSR investment decreased by $84 million, as the decrease in mortgage rates drove an increase in future prepayment projections. These fair value declines were offset by the combined impact of changes in the fair value of MBS, interest rate hedges and related income tax effects. MBS fair values increased by $128 million due to the decline in mortgage rates, interest rate hedges decreased by $67 million. Fair value declines on MSRs and interest rate hedges held in PMT's taxable REIT subsidiary drove the $15 million tax benefit this quarter. Inclusive of the tax benefit, the interest rate segment -- the interest rate sensitive segment contributed approximately $19 million to net income. The fair value of CMC's MSR asset at the end of the quarter was $3.8 billion, down slightly from $3.9 billion at June 30th as fair value declines in runoff from prepayments more than offset new investments from loan production. Delinquency rates for borrowers underlying PMC's MSR portfolio remain low while servicing advances outstanding decreased to $71 million from $83 million at June 30th. No principal and interest advances are currently outstanding. Income from PMT's correspondent production segment was up from last quarter, driven by higher volumes. Total correspondent loan acquisition volume was $26 billion in the third quarter, up 15% from the prior quarter, driven by the larger overall market. Conventional loans acquired for PMT's accounts totaled $5.9 billion, up 167% from the prior quarter due to PMT retaining a larger percentage of the total conventional correspondent production. We expect this percentage to decrease to approximately 15% to 25% in the fourth quarter in order to optimize PMT's capital allocation. Profitability in this segment in recent periods has benefited from the release of liabilities related to representations and warranties provided at the time of securitization as the high volumes of loans produced from 2020 to 2022 and past the three-year window for violations with minimal repurchase related losses. We expect the contribution from the release of liabilities to decline to more normalized levels over the next several quarters. The weighted average fulfillment fee rate was 19 basis points, down from 20 basis points in the prior quarter. PMT reported $35 million of net income across its strategies, excluding market-driven value changes, and the related tax impacts unchanged from the prior quarter. Looking forward, Slide 7 outlines the run rate potential expected from PMT's investment strategies over the next four quarters. PMT's current run rate reflects a quarterly average of $0.37 per share, up from $0.33 per share last quarter, primarily driven by the decline in short-term interest rates, which reduces expected financing costs. If the yield curve steepens further, we expect PMT's overall run rate would continue to increase closer to the $0.40 range, driven by overall -- higher overall yields in interest rate-sensitive strategies. Turning to capital. Liquidity is in place for repayment in full of the $210 million in exchangeable senior notes due in November. As David mentioned earlier, we strengthened our capital position, refinancing MSR and CRT term notes at more attractive rates and longer duration. At the end of the prior quarter, we issued $355 million of three and a half year MSR term notes with a cost of SOFR plus 275 basis points. In July, proceeds from that issuance were used to refinance $305 million of MSR term notes, which were at a cost of SOFR plus 419 basis points that were mature in 2027. And in August, we issued $159 million in four-year CRT term notes with the cost of SOFR plus 310 basis points, effectively refinancing $152 million of notes, which were at a cost of SOFR plus 375 basis points that were due to mature in 2025. We'll now open it up for questions. Operator?
Operator: Thank you. I'd like to remind everyone we will only take questions related to PennyMac Mortgage Investment Trust, or PMT. [Operator Instructions] Your first question comes from the line of Jason Weaver with Jones Trading. Please go ahead.
Jason Weaver: Hey, good afternoon. I just wanted to hone in on one of Dan's remarks there, specifically regarding the steepness of the yield curve and the earnings power of the entire PMT. Would you say that, that changes the calculus for the Board as far as dividend policy goes going forward? And how might that evolve over time?
David Spector: I think our narrative has been pretty similar around our expected earnings power and how that plays into the dividend evaluation. So we've been in this inverted yield curve environment for a pretty significant amount of time to the extent that we see the yield curve invert over time that should allow for greater earnings power in the interest rate sensitive strategies as the yield on those longer -- those assets, which are all really key off of longer-term rates, and which we mark to market on a monthly basis or a quarterly basis. As those yields increase or become higher relative to the rates at which we're funding those assets, which are generally at spreads over short-term rates that drives the overall earnings power and could push us back up toward our run rate, back up towards the $0.40 level, as I mentioned in my remarks. That's really been the case over the last several quarters. And we're now starting to see that reinversion really takes shape and really see that path back to the $0.40 run rate. And so as a dividend or as the Board evaluates the dividend and as we look at the dividend, we've generally endeavored to keep that stable to the extent that we see that path back to $0.40, which now seems more apparent, given the changes in the environment that the Fed has begun lowering short-term rates. And then most recently, we've seen this increase in the longer end of the curve. And so really it's flattening out there. So I think we're finally starting to see what we've been talking about for the last few quarters come to fruition, which really in terms of the dividend and the run rate moving towards it sort of plays into the narrative that we've had and the stability that we've had for the dividend over time.
Jason Weaver: Okay. Thank you for that. And just as a follow-up, I was curious if maybe more open ended. But if you're thinking about any emerging opportunities to shift your equity allocation possibly more towards the credit-sensitive strategies, given that the shift in monetary policy?
Dan Perotti: Yes. Look, I think, Jason, as you point out, and as I mentioned in my opening remarks, I do think there's a very good opportunity to increase our investment in credit-sensitive assets. We're seeing a lot of good securitization activity in investor loans and second homes away from the GSEs and as I mentioned, we're looking to close the deal in this quarter and aggregating to do another deal right after the New Year. And look, this is what PMT was back in 2009 when we IPO-ed PMT. This was the investment thesis that we were going to see a return to private label securitization. And it's a whole lot longer than we thought it would be, but I think we're seeing it very clearly. I like the activity that we're seeing in PFSI in terms of jumbo loan originations. And I think there's opportunity between -- they're currently executing those zones whole loan, but I think there could be opportunities to securitize those loans as well as buy loans into correspondent to securitize. And so I think the aggregation for jumbo loan deal, given the power of these two great companies is one where if we met our required returns, we can do jumbo loan securitizations. And so I do think that as I think about it, we've got this great CRT investment that's rolling off capital and the ability to redeploy it into credit-sensitive strategies it's something that I would like to do, and it's something that, as I mentioned, we'll be kicking off this quarter.
Jason Weaver: Got it. That's very helpful color. Thanks again guys.
Dan Perotti: Thank you, Jason.
Operator: Your next question comes from the line of Bose George with KBW. Please go ahead.
Bose George: Hey, guys. Good afternoon. Actually a couple of follow-ups. One, just on the steepening curve, the way that's happening now with the 10-year selling off. Does that -- are you kind of agnostic to how the curve steepens in terms of it impacting your returns?
David Spector: So yes, we're fairly agnostic to have the curve steepens. It's really when we're looking at the interest rate sensitive strategies, the relationship between the longer end of the curve and the shorter end of the curve. So whether interest rates come down or longer-term rates go up, and when I say shorter-term rates, I mean, really financing rates, that drives that spread overall and the interest rate sensitive strategies to be larger and drive that income potential or return potential for the strategy. So, either way or both is helpful. And we're fairly agnostic to exactly which way or both it happens.
Bose George: Okay. Great. Thanks. And then you noted you've been selling the jumbos out of PFSI. Can you just talk about the returns that those were securitized. I assume you're selling them just because securitization has not kind of hit the hurdle rates that you're targeting? And can you just talk about how close that math is getting?
Dan Perotti: That's right. I think that we -- we've got a -- I want to complete a securitization of investor loans and second homes and really build on that. I think it's something that we need to we did a jumbo securitization back in around 2013. And so we have the muscle memory. We just need to reignite it. And I think that it's one that will get done. I would say that it's getting close to our return target. I would say, it's in the -- it's not there yet. But I think given the amount of jumbo loan activity we're seeing in the marketplace and really the ability to aggregate rather quickly to do a securitization is what I'm finding encouraging about a jumbo loan securitization. Now I'll tell you when you're securitizing investor loans and second home loans that are eligible for delivery to the agencies, if there is a disruption in the private label market, you have the ability to deliver those loans to the GSEs. So that's, in effect, your hedge for the spread risk -- that's not the case with jumbo loans. So what's important to me is that we are able to aggregate quickly, get in the market quickly to do a securitization to help alleviate the spread risk associated with doing the general loan securitization. So we just got to get -- I want to get our first securitization under our belt, and then we'll continue to grow that operation. I don't see -- I don't see private label securitization declining. I think clearly, the banks have spoken. They're not going to be as active in jumbo loans other than for their prime customers, I think there's going to be opportunities to do jumbo securitizations. And similarly, I don't see the GSEs reducing their pricing on investor loans in second homes. And so I think there'll be opportunities there. So I'm really, as you can tell, excited about the opportunity that we have in P&C given PFSI and PMT together represent 7% of the mortgage market. So the ability to aggregate the loans is one that's not the issue. And I think that that's -- I think it's one that over time, we're going to continue to grow our expertise and our ability to securitize those loans that have subordinate bond investments.
Bose George: Great. That's helpful. Thank you.
Operator: Your next question comes from the line of Doug Harter with UBS. Please go ahead.
Doug Harter: Thanks. David, one of the areas you didn't touch on as possible securitization would be second liens, we're obviously PennyMac is originating those as well. Can you just talk if the execution there has come close to hurdle rates or would still have a ways to go to be attractive?
David Spector: We do --it does have a ways to go. As you can tell from as I'm talking today to you, everyone on the phone, at the top of the waterfall in investor loans in second half, those meet our return targets. Secondly is jumbo loans, which is getting very close, I think the second liens, we're still seeing a tremendous bid on a whole loan basis going to other market participants who have a lower cost of capital. And so it's one that we'll continue to look at, and we monitor, as you can tell, all of these markets. But suffice it to say, if there was a market disruption or we saw the ability to invest in there. There's nothing to prevent us from doing that securitization.
Doug Harter: Great. And then as you think about how should we think about the amount of capital that can be deployed into these opportunities -- and just in thinking about kind of the level of MSR retention that PMT is likely to have kind of over the coming quarters?
Dan Perotti: Look, I think that -- we've done a really nice job keeping the MSR investment -- the UPB of the MSR portfolio rather flat over the last two to three years as we've been faced with the capital constraints of PMT. I look at the run-off from our CRT investments as the capital that we can use to redeploy into the credit-sensitive strategies to maintain that at a pretty constant level. At the end of the day, as we continue to produce returns that we've seen over the past two years, I'm confident that we'll be able to raise additional capital. And that's something that we've been focused on at PMT, really focused on delivering the returns that exceed the dividend yield that will allow us to continue to see PMT share price go up, so we can issue common equity, or we can issue other forms of equity. But clearly, we have enough capital to really ramp up the securitization effort, as I mentioned from the capital running off from CRT and then we'll continue to produce the returns
Doug Harter: Great. Thank you, David.
Operator: Your next question comes from the line of Matthew Howlett with B. Riley. Please go ahead.
Matthew Howlett: Hi, David. Hi, Dan. Thanks for taking my question.
Dan Perotti: Thanks, Matt.
Matthew Howlett: Just a follow-up on the last question. Would you expect PMT eventually to retain more you get back to that50-plus percent retention of conventional correspondent production? Or do you have so many opportunities. It sounds like you just have this incredible subset. Does it make sense to just sell – looking to selling to PFSI and free up capital for the securitization effort and other things?
Dan Perotti: Yes. Exactly, Matt. I think that's really the idea behind the reduction in terms of the allocation of conventional correspondent that we mentioned from 42% in the past quarter to the 15% to 25%. So as we see these opportunities in the securitization market and are aggregating for those opportunities, it's ensuring that we're not crowding out by adding on more additional MSR through the conventional correspondent retention. And so I think it's exactly as you described it opening up a little bit of capital room to aggregate and retain the interest on those securitizations, and that's really leading to that reduction on the correspondent side. As David mentioned, if we deliver returns as we expect and are able to raise additional capital that could be a catalyst to increase that increase that proportion of the conventional loans that are retained again, and invest in additional MSR alongside the credit or a greater concentration in the credit-sensitive assets, but that's sort of as we move forward, and we see the opportunities moving forward.
Matthew Howlett: Thanks for that. Is the goal, I remember, I've been covering PMT for a long time, and you wrote a 50/50 credit interest rate five, six, seven years ago. It's going to take time. I'd love to see it be a regular issue when the non-securitization market is going to be great. How long does it -- where do you want to take the credit segment? I mean, do you want PMT looking out five years to be 50/50? Or is this going to be dependent on the market?
David Spector: Look, I think it's – look, we're an investment vehicle in PMT, and we want to deliver the highest return to our shareholders, and that's going to drive our decision-making. Having said that, I'm with you Matt, I like to see a better balance between the credit sensitive strategies and the interest rate sensitive strategy segments, and so the ability to do more and more securitizations to increase the amount of investments in credit-sensitive strategies is one that we're highly focused on. But at the end of the day, it's going to be returned. It's going to be the return on common equity that we want to continue to be above 10% on that, if not higher and do it in a meaningful way. And so I do think that it could take a little bit of time, but we're clearly well on our way to getting there.
Matthew Howlett: Yes, that's exciting to see, like you said, David, just so PMT originally was started out as, and it's taken time, but it sounds like the non-agency market is just going to really take up. Last question. I mean look, you got every interest rate strategy with the steepening, repo starting to come down, it looks like the Fed will cut a little bit more. You got -- how much more -- when you refinance these CRTs on the MSR term out, I mean, how much more is there left to do with this? I mean, can you -- how much cost savings is left?
David Spector: I think, generally speaking, on the refinancing of debt side, it depends a little bit on what happens in the market and where spreads go. And so there may be additional opportunities. Obviously, we have struck on the opportunities that we've seen thus far. And we don't necessarily see anything imminently on the horizon in terms of refinancing further in terms of those term notes or term loans that we have. But we have seen pretty significant spread tightening over the past few quarters. That's what led or participated some of these refinancings. And to the extent that we see further spread tightening that could precipitate us looking at doing some further refinances. But in the near-term, we think we've done some pretty good work here that will benefit us as we're moving forward, and there isn't necessarily anything specifically on the horizon that we're looking at.
Matthew Howlett: You had the company in a great position. I really appreciate it. Thanks guys.
David Spector: Thanks, Matt.
Operator: Your next question comes from the line of Eric Hagen with BTIG. Please go ahead.
Eric Hagen: Hey thanks. Just one thing, did you say what the source of cash or liquidity is to retire the debt that's coming due next month? And is the expectation to carry lower leverage for a period of time? Or how are you thinking about that?
Dan Perotti: So, the source of funds for repaying the debt, debt to do next month is drawing on our secured lines and so we've positioned the liquidity really more or less ready to be able to retire that debt. And sorry, what was the second part of your question, Eric, I didn't hear that clearly.
Eric Hagen: Well, it sounds like the leverage is going to be unchanged. Does the draw that you made to retire that is that reflective at on the balance sheet at the end of the third quarter?
Dan Perotti: Yes, it's not reflected at $930 million. So, yes, it's about -- during the month this month. But yes, you're right, it's overall leverage is pretty -- would be pretty similar to 9/30, we're basically swapping secured debt for that convertible issuance.
Eric Hagen: Okay, super. All right. Thank you.
Operator: Your next question comes from the line of Bose George with KBW. Please go ahead.
Bose George: Hey, thanks for the follow-up. Just wanted to see if you could provide some color on the types of buyers in the whole loan market for both for the jumbos and the second liens?
David Spector: Look, we're seeing a wide range of buyers. I think that it's -- we're able to sell these loans to insurance companies where some of the private equity shops are setting up their own conduits and doing their own aggregation, securitization. And similarly, on the PFSI side when we sell second – second lien, we see similar buyers. And so it's a wide range of buyers. The thing that impresses me is the depth of the market. And that's why, quite frankly, I'm fairly confident, very confident in our own ability to securitize because I think there's a very deep bid for these loans, deeper than I've seen in quite some time. And so I just think that there's a need for structured assets and structured investments. And so the ability, quite frankly, to organically create the opportunities, one that's really unique in the marketplace. And so it's just -- it's not banks, and I will tell you that. It's -- but it's all the usual cast of characters that we've seen in the past.
Bose George: Okay. Great. Thanks a lot.
Operator: We have no further questions at this time. I'll now turn it back to Mr. Spector for closing remarks.
David Spector: Well, thank you, operator. And thank you all for joining us today. Really appreciate the time and the questions that were asked. If you have any follow-up questions, please feel free to reach out to our Investor Relations group. And they will follow-up with you and me. Have a good day, and we'll -- and again, thanks a lot for the time.
Operator: This does conclude today's conference call. Thank you for your participation and you may now disconnect.
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